South Africa’s central bank held its main lending rate steady at 6.75% on Thursday, citing the need for more progress in lowering inflation expectations. The decision aligns with forecasts from most economists polled by Reuters, who anticipated no change to the repo rate.

Governor Lesetja Kganyago explained that the Monetary Policy Committee (MPC) remains cautious. Specifically, four of the six MPC members voted to keep rates unchanged. Meanwhile, two members supported a 25-basis-point cut, reflecting some internal debate over the timing of potential easing.

Importantly, the bank highlighted ongoing price pressures as a key concern. In particular, proposed increases in electricity tariffs could push inflation higher in the coming months. Additionally, volatile food prices and global energy costs continue to cloud the outlook.

Although headline inflation has moderated recently, the central bank wants to see more durable declines in medium-term expectations before cutting rates. After all, premature easing could risk reigniting inflation, especially if utility costs rise sharply.

Moreover, the bank noted that while economic growth remains sluggish, stability in the currency and improved fiscal discipline provide some support. However, structural challenges—like unreliable power supply and high unemployment—still weigh on long-term prospects.

Looking ahead, the next rate decision will depend heavily on incoming data. If inflation expectations continue to ease and tariff hikes prove smaller than feared, the door could open for cuts later in 2026. For now, though, the South African Reserve Bank is choosing patience over action.

In summary, the South Africa interest rate decision reflects a careful balancing act. While the economy needs stimulus, the central bank refuses to move until it sees stronger evidence that inflation is truly under control.

READ: UK and China Strike Visa-Free Deal to Boost Services Trade